This week, at almost the half way point of this crazy year, I’ve been reflecting on how we look at progress. Are you someone who has a plan and likes to keep track of everything or do you prefer to go with the flow and see where life takes you? Most of us are probably some combination of both, so how do you decide what to measure and how do you avoid doing too much or too little? Success looks different to each and every one of us, but it’s important to keep ourselves focused and motivated. How do we know if we’re on track or veering off course?
“Not everything that counts can be counted, and not everything that can be counted counts.” Albert Einstein
What and how much to measure?
Business is unpredictable, and about the only thing you can count on is that everything continuously changes. You need to measure your business performance so you know what works and what doesn’t. Being an entrepreneur is a journey. It’s always a work-in-progress, and you’re never finished. Success and failure are both part of the process but it’s important to measure as you go so you can assess where you are on the road to where you want to be. Metrics are really important if you want to scale what you’re doing. You need to know what works and what doesn’t – you need to drive consistency and reliability.
Metrics can appear deceptively simple or devilishly complex, and the danger is that having information without context can drive decisions and behaviours that you may not be able to predict. To put it in simple terms, if you don’t measure the critical elements of your business, you have no way of knowing what state it’s, what direction it’s heading in and whether it’s on track or falling behind. If the data you’re looking at is confused, ill-defined or inaccurate, it might lead to make poor decisions and miss opportunities.
Some business owners try to measure everything, and some don’t measure anything at all. Too much data can be just as bad as too little – the challenge is deciding what the truly important metrics are. It’s not what you measure that’s important but the meaning you give each measurement. One way of thinking about this is – Imagine being stuck on a desert island and every day you received a piece of paper with some information written on it about your business. You couldn’t talk to anyone or get any further data. What would need to be written on that paper every day for you to KNOW what was happening in your business?
Here are my Top 10 Tips on what and how to measure:-
🌟 Focus on activity. It’s easy to focus on results but it’s activity that leads to success. What are your input metrics, those activities that predict future growth? By focusing on leading measures you’ll drive better results.
🌟 People. Without a team it’s impossible to scale a business. How are you leveraging your employed or outsourced team? How happy and productive are they and how could you help them spend more time in their flow?
🌟 Customer satisfaction. Many businesses get so tied up in what they’re doing internally they forget to focus on what their market is telling them. How do your clients measure your performance? What does good look like for them?
🌟 Quality. Your clients demand high quality consistently. How are you measuring your quality. What does good looks like? Have you defined what good looks like and how are you ensuring consistency?
🌟 Cash is king. Doesn’t matter how much money you’re making on paper, without cash you’ll crash and burn. Plenty of businesses with great revenues fail because their owners didn’t keep an eye on cash.
🌟 Productivity. How efficient are your operations? Are there ways that you could improve your processes to make them smoother, more consistent, less costly? Do you measure and reward innovation in your team?
🌟 Succession. Most small businesses are heavily reliant on key individuals. In order to scale you’ll need to think about succession plans. What’s your Plan B if and when key team members chose to take another path?
🌟 Retention. So many businesses put all their focus on new clients. Focus on retention metrics, cost of acquisition and client lifetime spend. How can you offer more value to your existing clients as well as attracting new ones?
🌟 Profit over revenue. The revenue number is the one everyone talks about but it’s profit that’ll keep you in business. Profit is a measure of how well you are leveraging the resources in your business, including your people.
🌟 Your expectations. What do you want from your business and how do you define success? Do you want more time, more money, more of a challenge? How does your business support your personal goals?
It’s completely unrealistic to expect yourself to know everything or be able to do everything. Please be kind to yourself and if you’d like to talk through the choices you’re facing or any blockers in your business, let me know.
Lisa Zevi – June 2021